Property tax
Tax on Agricultural Income in Pakistan
Agricultural income is exempt from federal income tax under section 41, but the exemption is narrow and the tax is provincial rather than absent. The provinces did not all move together: Khyber Pakhtunkhwa's new rates ran from 1 January 2025, Sindh carved out the first six months by a later Act, and Punjab moved its rates out of the statute into rules.
Where these figures come from
- Statutory basis
- Income Tax Ordinance, 2001, as amended by the Finance Act 2026, for tax year 2027 (1 July 2026 to 30 June 2027).
- Last checked against the statute
- by BarrioVibe, which files income tax returns through FBR IRIS.
These figures are an estimate computed from the rates above, not tax advice for your situation. Your return depends on facts a form cannot see, so treat the number as a starting point and speak to us before you file on it.
What each province actually did
Rates are set provincially and the structures now broadly mirror the federal slabs, but the commencement dates and the instruments differ.
| Province | Instrument | Position |
|---|---|---|
| Khyber Pakhtunkhwa | KP Agricultural Income Tax Act 2025 | Rates in the Act, in force 1 January 2025 |
| Sindh | Sindh Act II of 2025, amended by Act XXV of 2025 | Old rates to 30 June 2025, new slabs from 1 July 2025 |
| Punjab | Amendment Act 2024, rates by notification | Schedules omitted from the Act, rates prescribed by rules |
What the provincial charge comes to
The provincial slabs now broadly mirror the federal table. Enter the farm income to see the figure, and read it alongside the commencement caveats above rather than instead of them.
Agricultural Income TaxWhy the exemption exists at all
Agricultural income tax is a provincial subject under the Constitution, which is why the federal Ordinance exempts agricultural income rather than taxing it: the federation is not the government entitled to tax it. Section 41 is a jurisdictional boundary rather than a relief.
That is the reason the reforms of 2024 and 2025 had to be enacted four times, once by each province, and the reason they diverge. It is also why "agricultural income is tax free in Pakistan" is a sentence that has never been true: it is federally exempt and provincially taxable, and the provincial side has just become considerably more real.
Questions
The questionspeople ask
Is agricultural income tax free in Pakistan?
It is exempt from federal income tax under section 41, because agricultural income tax is a provincial subject. It is not untaxed: every province levies its own agricultural income tax, and the provincial regimes were substantially reformed in 2024 and 2025.
What counts as agricultural income?
Section 41(2) is narrow. Rent or revenue from land situated in Pakistan used for agricultural purposes; income from agriculture or from a process ordinarily employed by a cultivator to make produce marketable; sale by that same person of produce on which no other process was performed; and income from a farm building on or in the immediate vicinity of the land.
Is processing produce agricultural income?
Only where the process is one ordinarily employed by a cultivator or receiver of rent-in-kind to render the produce fit to be taken to market. Value-added processing beyond that falls outside section 41 and is ordinary business income.
Can I use agricultural income to explain an unexplained asset?
Only to the extent of provincial tax actually paid. The proviso to section 111(1) accepts the explanation to the extent of agricultural income worked back on the basis of agricultural income tax paid under the relevant provincial law.
Did all provinces tax agricultural income at 45% from January 2025?
No, and this is the most repeated error. Khyber Pakhtunkhwa did. Sindh applied the old rates to 30 June 2025 and moved the new slabs and super tax to 1 July 2025 by a later amending Act. Punjab moved its rates out of the statute into rules.
What are the agricultural income tax rates in Punjab?
Punjab omitted both Schedules from its 1997 Act in 2024 and prescribed rates by notification in March 2025 on the same structure as the other provinces. It has been reported that the Assembly Speaker ruled in April 2026 that those notifications were invalid. We could not verify that beyond press reporting, so treat the current Punjab position as disputed.
Is livestock income taxed in Punjab?
It was, briefly. The 2024 amendment brought livestock into the Punjab base and the Amendment Act of 2025, gazetted 5 August 2025, omitted it. Livestock was within the charge only between 1 January and 5 August 2025.
Does a farming company pay agricultural income tax?
Yes, under the new provincial regimes. Khyber Pakhtunkhwa sets corporate farming at 20 per cent for a small company and 29 per cent otherwise, with a super tax band above Rs 150 million. The other provinces adopted broadly similar structures.
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Rather have someone handle it?
We file returns through IRIS every day. If the answer above raises a question about your own case, that is the conversation to have before the deadline rather than after it.